Transforming the NRMA

Friday, 01 December 2023

Deborah Tarrant photo
Deborah Tarrant

    Bringing members along for the ride towards the future of motoring in Australia is a challenge that has been embraced by the NRMA chair-CEO team. 

    It’s one of Australia’s most trusted brands and our largest member-owned organisation, but faced with the EV era, the NRMA had to transform. The board had to be tenacious, says chair Tim Trumper GAICD (pictured left, opposite) and the strategy from group chief executive Rohan Lund (pictured right) had to be bold. Now, the 103-year-old motoring organisation is powering into the future.

    Rohan Lund

    The CEO’s POV

    The first time I was approached to come to the NRMA [in 2015], I must admit I was a little lukewarm. The business was struggling in relevance and had seen a decline in membership for many years. But the pitch was an opportunity to work with a trusted brand, a large subscriber base and a blank sheet of paper to do something different.

    I was at Foxtel at the time and I was aware of Tim, who was on the board. I knew what he’d done when he was in the media and how he was thinking about data. On a personal level, I had probably become slightly disillusioned with the industry I was in and wanted to do something that contributed more than just making rich people richer. I was intrigued by the idea of a mutual and what was possible with a reset, and I had a lot of respect for Tim.

    I remember presenting the board with a strategy that flipped the earlier thinking on its head, suggesting that the NRMA take the lead on electric vehicles rather than fearing them. For me, it felt like a natural step and no different to how NRMA led the transition from horse and cart to car a century ago.

    The challenge to any future mobility strategy was the unpredictability of timing and take-up. We needed a dual-track strategy to build out domestic tourism in parallel so we’d have the longevity and funding to navigate uncertainty. We asked the board to consider a “social dividend” so we could use a percentage of profits to start building infrastructure in regional communities. That way, they wouldn’t be left behind when electrification started.

    Tim and the board have been fantastic supporters. The task was on management to create enough profit to reinvest in the businesses, and to be sensible with investing so we didn’t introduce too much risk until the future was more settled. That’s a delicate line to walk.

    Aligning on the future

    Tim and I are most aligned in our view of the future. When he became chair [in late 2017], we were both very mindful that our organisation had been based in the automotive industry and profound change was on the horizon, not least electrification, autonomy and connectivity. He could see that the greatest risk the organisation faced was not doing anything. We had seen it before in other industries and learned the hard way that ignoring it won’t make it go away.

    We start from a similar place because we’re both alive to disruption, a changing world and new opportunities to seize, but we have different approaches for how we actually get there. I like to think of myself as a change agent. I’m very execution-oriented and I work hard on culture as the way to deliver strategy and govern business.

    Given what we wanted to do, it was critical that we embraced a culture that truly cared about our members and customers, and was thinking about their needs today and tomorrow. That’s the way to deliver a change agenda and govern an organisation.

    Tim was committed to ensuring the board shared that culture, which means we’re all using the same language and holding the same customer obsession. He brought calm to my chaos, making sure we kept on track, moved at an even pace and included everyone in the journey. Change like this isn’t possible without a steady hand to keep everyone focused on the end game and to deal with the noise on the way without distraction.

    Finding common ground

    Tim is a very open and generous chair. He is genuinely curious to hear the voice of all board members, multiple stakeholders and multiple inputs, and he’s very data-driven. He likes to see all the information before he makes decisions. That works because it forces me to be more open to multiple opinions, and to be guided by the information at hand.

    From the outset, I was keen to have a working relationship with very open communication between us. It was important to me that I felt comfortable talking through the issues of the business with Tim — the good and the bad. If there are concerns or feedback from the board, then I want to know. We have a principle of “no surprises” — and that goes both ways.

    The most important aspects of our relationship are transparency and trust, and I trust Tim immensely. I know he comes from a good place. He is a good person with good values and he’s obsessive about our members and the reputation of the NRMA.

    Curious and curiouser

    I’ve seen real conflict in organisations before and that’s not what I see with Tim. When he is uncomfortable, he becomes more curious and asks more questions. I wouldn’t describe it as conflict, it’s more like hypervigilance — wanting more information — until he’s less uncomfortable.

    Organisations are complex. Managing lots of external stakeholders is complex. Working with nine members of the board is complex. And while Tim makes sure he hears from every director on each issue, from my perspective, that can deliver nine different voices with nine different views — all insightful and valuable, but often very different.

    While it’s completely appropriate for good governance that everyone has a voice, there’s always a challenge in finding a common direction. Tim and I talk through what I’ve heard, asking, where is the common ground? Where are the tensions around the edges? We find a way to make sure everyone has been heard and distil those voices into something executable.

    Tim Trumper GAICD

    The chair’s POV

    When we appointed Rohan to the CEO role, we wanted someone who could see the future of mobility and would not shy away from the changes that needed to be made to help the NRMA transform. He was the outstanding candidate.

    Rohan’s capacity to anticipate change is high. His capacity to enter the strategy space in an intellectual way is high. He’s good at vision and timing. We both have experience in the media industry, which was first down the digital coal mine. We’ve seen what inertia can do.

    When I was elected chair, Rohan and I had a meeting about how we’d interact with each other — that was the agenda item, to map out our rules of engagement. We still stick to those rules. We see the same future, align on purpose and understand the same facts. Our golden rule is “no surprises”. For me, candour is the most important thing for the chair and CEO relationship. We talk a lot about what we see coming.

    Seeing the future together

    We focus on customer experience and how we can create more value for customers. Being a mutual, our members own the business so the capacity to get involved with a customer’s needs is much, much higher. We talk a lot about the future needs of the future customer because that is where we want to be deploying capital. We’re focused on what future mobility will mean for the NRMA and how to keep growing and diversifying our membership. We know the world is changing very quickly.

    Electric vehicle charging is a great example. When we started seeding investments into EV charging, some people were thinking, “What is the NRMA doing?” But EVs are doubling in consumption, year on year. Many car makers won’t be making a petrol vehicle in 2030. The future of driving is going to be heavily electric and we’ve built the biggest charging station network in Australia so we’ve arrived at the future state before many have got their skates on. It all happened under Rohan’s leadership. He’s done a great job.

    Rohan is optimising for future customer needs in the short term. Right now, the cost of living is a huge issue for our members. By using the NRMA app, in the past 12 months they’ve saved $142m because we’ve leveraged the collective power of the membership to buy and harvest discounts from our partners, including on petrol and holiday parks.

    Membership in the past 12 months is up by 200,000 people. NRMA is 103 years old and last year we grew revenue by 30 per cent. What’s important, not only with me, but also with the board broadly, is that Rohan knows the risk appetite of the board and areas of continued focus — safety, ESG and service standards will always exercise the board.

    Creating perspectives

    To keep us all on track, once a year we have a board strategy session where we bring in different experts to allow us to understand the operating landscape in various businesses — everything from emerging technology, climate impact, customer sentiment and macroeconomics. Do we see and understand the same drivers of change? Do we share the same set of assumptions on the operating landscape of our business, like inbound tourism? The trajectory of the uptake of EVs, for example? 

    We put those factors into a framework where we align on what we believe. Then you have a five- or 10-year view and a 12-month view. If we get this right, it minimises the number of times you’ll be surprised by someone’s view because you share so much foundational data.

    Another incredibly valuable initiative is at the end of every board meeting, we have a review. One director is tasked with summarising the meeting, which includes how the chair and management performed, and the quality of the papers. Was the tone aligned with culture? Those reviews are very instructive. You learn a lot and have to take on the feedback, which applies to Rohan, too. We started doing that a few years ago and at first, people didn’t know what to say in a meeting summary, but now it’s really robust and powerful.

    Convincing each other

    Rohan and I see some things differently. He’s a trained lawyer, strong on strategy. I’ve had a front- row seat at the dawn of AI and data analytics, and how technology impacts business and customers at scale. I bring some of this to our discussions, but you can disagree without being disagreeable.

    My mantra is to educate before change. If I want to change something, I need to bring the information to show why I believe it. The “you should do this” approach never works with a strong CEO. It’s more, “I’ve been contemplating this, my evidence is that, my third-party validation looks like this, that’s why I think this. How do you react?” People notice how Rohan and I interact, so being cordial, courteous and respectful helps set a tone for the board and executives. When we do disagree, I try to take a considered approach with curiosity and empathy.

    Rohan is in the business. He has an asymmetric information advantage over the board. If he thinks strongly about an issue and I don’t agree, I’m careful about how I express my contrary view: “I need to understand why you feel like that because from here I can’t see it.” Or “I think the rest of the board would see it through this lens, therefore it’s going to get friction, so help me understand it.”

    That’s happened on occasions discussing acquisitions. I believe when we have said no to something, it’s in a way he completely understands, because the board’s reasons are explained fully as to why an idea was paused. By the time we’ve fully explored the issue, we land on, “Maybe it’s not the right time for this idea.” One of us convinces the other, eventually. 

    How to power through a board meeting

    Chair’s perspective 

    Time management can be an issue. I try to weight the agenda to where the focus needs to be. A regular in-camera session for directors allows me to get a sense of where there’s contention in the agenda. If I know everyone thinks items one to four are fine, and the papers are read and understood, we move through those quickly. But item five may have lots of varying views and need more time. That’s more adaptive than giving every item 15 minutes.

    CEO’s perspective 

    We’ve moved to much shorter papers for meetings, which has proven harder than just producing all the information. Less than 10 pages, if possible, and everything management suggests is supported by data. We don’t waste time presenting papers in a board meeting, as they are taken as read. The meeting is for the conversation that follows. 

    This article first appeared under the headline 'Driving Seat’ in the December 2023 / January 2024 issue of Company Director magazine.  

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